Tata Nano: a Positioning Disaster
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IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. PP 47-53 www.iosrjournals.org Tata Nano: A Positioning Disaster Dr. Neelam Kalla Assistant Professor Department of Management Studies Faculty of Commerce and Management Studies Jai NarainVyasUniversity, Jodhpur, Rajasthan Case Summary: In the highly volatile markets and ever changing customer preferences, the key to survival is the right positioning. Positioning is all about getting the right position; but the game remains absolutely psychological. Tata Nano is the best example of positioning and repositioning where both the strategies failed. In the case of Tata Nano; a number of factors have played a significant role like production delays, product attributes, economic crisis, political controversies or failure to select the right market segment. After a long time of its launch, Tata has strived to change its image form cheapest car “Lakhtakiya” to smart city car butthisattempt also seems to fail again highlighting the fact that the first positioning remains mostsignificant; just as the first move in the game of chess remains the basis for your success. Even the first mover advantage, which has been central for the victory of the many of the most recognized big brands, could not save Tata Nano from its failure and the imageengravedin the minds of Indiancustomers as low-priced car was so strong that all of the Tata’s moves went futile. In the present case the author takes the positioning and psychographic factors into consideration and endeavours to take a thorough analysis that how this “People’s Car” of India turned out to be a positioning catastrophe. Keywords: Positioning, Branding, Tata Nano. I. Introduction Tata Nano popularly known as people‘s car was launched at such time when India‘s largest car company known for its cost effective products Maruti Suzuki was pondering upon the strategic option of discontinuing the production of the than available cheapest car of Indian Market and it flagship product Maruti Suzuki 800. The Indian automobile market at that time was flooded with newly launched high priced cars of multinational brands. When Tata launched Nano; it was not just a business opportunity, but also a tool to improve quality of lived of millions of Indian who were facing the dangers of fast paced roads and everyday were being exposed to accidents due to non-affordable four wheelers. At that time and still true to some extent the average Indian customer could not afford a two wheeler because most of the two wheelers are out of the budget. The price list for lowest priced cars available make it clearer. Table 1 Price List For Close Competitors Of Tata Nano Model Variant Price Maruti Suzuki 800 MPI STD BS III Rs. 2,28,820 Maruti Suzuki 800 MPI STD BS III (Met) Rs. 2,31,797 Maruti Suzuki 800 MPI AC BS III Rs. 2,55,396 Maruti Suzuki 800 MPI AC BS III (Met) Rs. 2,58,373 Model Variant Price Maruti Suzuki Omni LPG CARGO BS III Rs. 2,37,926 Maruti Suzuki Omni LPG Taxi Rs. 2,47,059 Maruti Suzuki Omni LPG Taxi (Met) Rs. 2,49,492 Maruti Suzuki Omni MPI CARGO BS IV Rs. 2,43,597 Maruti Suzuki Omni MPI STD BS IV (Met) Rs. 2,71,381 Model Variant Price ALTO 800 STD CNG Rs. 3,41,308 ALTO 800 STD CNG (Met) Rs. 3,45,209 ALTO 800 LX CNG Rs. 3,62,239 ALTO 800 LX CNG (Met) Rs. 3,66,110 ALTO 800 LXI CNG Rs. 3,81,174 ALTO 800 LXI CNG (Met) Rs. 3,85,062 ALTO 800 STD Rs. 2,62,512 ALTO 800 STD (Met) Rs. 2,66,399 International Case Study Conference 2015, Mumbai, India 47 | Page IES Management College and Research Centre, Mumbai, India IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. PP 47-53 www.iosrjournals.org ALTO 800 LX Rs. 2,98,655 ALTO 800 LX (Met) Rs. 3,02,542 ALTO 800 LXI Rs. 3,21,279 ALTO 800 LXI (Met) Rs. 3,25,167 ALTO 800 LXI Airbag Rs. 3,38,038 ALTO 800 LXI Airbag (Met) Rs. 3,41,926 Source: http://www.nriol.com/returntoindia/cars-price.asp as retrieved on 12/08/2014. These prices were not in the reach of Indian customers. In comparison to other countries the per capita income and purchasing power of Indians were still very low. If we look at the table given below, the scenario gets clearer; Gross Domestic Product per capita in India, which was last recorded at 5238.02 US dollars in 2013, when adjusted by purchasing power parity (PPP). The GDP per Capita, in India, when adjusted by Purchasing Power Parity was equivalent to only 29 percent of the world's average. Table 2: Gdp Per Capita Ppp Source: http://www.indexmundi.comas retrieved on 10/10/ 2014 After looking on the above figures it was not wonder that a major part of population of India was still riding two wheelers and not owning four wheelers as Ratan Tata narrated in the his address at launching ceremony of Tata Nano. This venture was not only commercial but also carried a social concern for majority of Indians who could not afford to buy a four wheeler and were forced to face the challenges of tough weather and were also more prone to road accidents. So it was very natural for a company like Tata to take up aventurelike this. The excerpts from the speech of Ratan Tata (2009), on the launching ceremony clarifies this itself: ―Today's story started some years ago when I observed families riding on two wheelers, the father driving a scooter, his young kid standing in front of him, his wife sitting behind him holding a baby and I asked myself whether one could conceive of a safe, affordable, all weather form of transport for such a family. A vehicle that could be affordable and low cost enough to be within everyone's reach, a people's car, built to meet all safety standards, designed to meet or exceed emission norms and be low in pollution and high in fuel efficiency. This then was the dream we set ourselves to achieve. Many said this dream could not be achieved. Some scuffed at what we would produce, perhaps a vehicle comprising two scooters attached together or perhaps an unsafe rudimentary vehicle, a poor excuse for a car. Let me assure you and also assure our critics that the car we have designed and we will be presenting to you today will indeed meet all the current safety requirements of a modern day car.‖ Profile Of Tata Motors Tata Motors Limited is India‘s largest automobile company, with consolidated revenues of INR 2,32,834 crores (USD 38.9 billion) in 2013-14 is also leading in commercial vehicles in each segment, and among the top in passenger vehicles with winning products in the compact, midsize car and utility vehicle segments It was established long back in 1945. It has about 8 million Tata vehicles on Indian roads, and the company‘s manufacturing base in India is spread across Jamshedpur (Jharkhand), Pune (Maharashtra), Lucknow (Uttar Pradesh), Pantnagar (Uttarakhand), Sanand (Gujarat) and Dharwad (Karnataka). International Case Study Conference 2015, Mumbai, India 48 | Page IES Management College and Research Centre, Mumbai, India IOSR Journal of Business and Management (IOSR-JBM) e-ISSN: 2278-487X, p-ISSN: 2319-7668. PP 47-53 www.iosrjournals.org One after another Tata has been on the road for innovation and improvement by jioininghnads together for world‘s most renowned companies. It joined a strategic alliance with Fiat in 2005, and set up an industrial joint venture with Fiat Group Automobiles at Ranjangaon(Maharashtra) to produce both Fiat and Tata cars and Fiat powertrains. The company‘s dealership, sales, services and spare parts network comprises over 6,600 touch points, across the world. Tata Motors, also listed in the New York Stock Exchange (September 2004), has emerged as an international automobile company. Through subsidiaries and associate companies, Tata Motors has operations in the UK, South Korea, Thailand, South Africa and Indonesia. Among them is Jaguar Land Rover, acquired in 2008. In 2004, it acquired the Daewoo Commercial Vehicles Company, South Korea‘s second largest truck maker. Tata Motors is also expanding its international footprint, established through exports since 1961. The company‘s commercial and passenger vehicles are already being marketed in several countries in Europe, Africa, the Middle East, South East Asia, South Asia, South America, CIS and Russia. It has franchisee/joint venture assembly operations in Bangladesh, Ukraine, and Senegal. Not only this, Tata is one of the companies of India which has earned a great recognition for its social concerns and has received several wards in the field of CSR. Source: http://www.tatamotors.com/about-us/company-profile.php as retrieved on 06/09/2014 Tata Nano The Tata Nano is a small car manufactured by Tata Motors made and sold in India. Nano was initially launched with a price tag of 100,000 (US$1,600) which was ultimately increased with time. Designed to lure India's burgeoning middle classes away from two-wheelers, it received much publicity. With the launch of this car only Indian market was hoping big. Tata Nano's launch could expand the Indian car market by 65%, according to rating agency CRISIL(TNN, 2008). The low price makes the car affordable for families with incomes of Rs 1 lakh per annum, the agency said.